Who is the Real Bill Morneau and Does He Understand Middle Class Canada?

Those of you that live outside of Canada are unlikely to be aware of the fact that the Trudeau government is about to enact the largest change in the country's tax system since the 1970s.  Under the guidance of current Minister of Finance, Bill Morneau, the federal government is currently undertaking consultations with stakeholders on the proposal which would essentially put an end to the use of private corporations as a tax advantage, a system which has been in place since 1972.  Why is this being done?  It's all under the guise of redistributing wealth from the so-called upper classes of Canadian society to the middle classes which have been the beneficiary of changes to  social programs under the Trudeau government.  In at least some people's minds (mine included), the pitting of one social class against another is little more than class warfare, a technique often used by governments throughout history.

Let's see what Prime Minister Justin Trudeau had to say about the changes:

"We’re doing more for the people who need it, and less for the people who don’t. That’s the commitment we made to Canadians and will continue to make to Canadians."

Now, let's see what Bill Morneau had to say about the changes from his recently released "Tax Planning Using Private Corporations" publication:

"One of our Government’s first actions was to cut taxes for the middle class, and raise them on the richest one per cent. Because of our Canada Child Benefit, nine out of ten families with children are now receiving more in child benefits than they did under the previous system, leaving them with more money to spend on their groceries, summer camps and school supplies. Thinking about the long-term, we worked with the Provinces and Territories to strengthen the Canada Pension Plan so that workers today and future generations can look forward to a more secure retirement. And we increased the Guaranteed Income Supplement top-up benefit by over $900 annually for the most vulnerable single seniors. This focus on the middle class, the help we bring to those working hard to join it, as well as historic investments in our communities—on things like roads, bridges and water purification—have had a real, measurable impact...

In addition to efforts to combat international tax evasion and avoidance, our Government is looking closer to home, and is taking steps to address tax planning strategies and close loopholes that are only available to some—often the very wealthy or the highest income earners—at the expense of others. Currently there are signs that our system isn’t working as well as it should, specifically when it comes to private corporations. There are worrying trends. There is evidence that some may be using corporate structures to avoid paying their fair share, rather than to invest in their business and maintain their competitive advantage." (my bold)

Is it just me or does Mr. Morneau make it sound like taxpayers that use the existing private corporation tax laws are criminals?  

So, who is it that the Trudeau government is targeting with these changes?  The private corporation tax strategy is used by millions of Canadian taxpayers including (but not limited to) farmers, fishermen, doctors, dentists, contractors, tradespeople like plumbers, carpenters and electricians, lawyers, small business owners, accountants and consultants of all types; certainly, while some of these would be considered "upper class", many of these individuals would be classified as "middle class".  In many cases, this system compensates business owners for the fact that they do not have access to pension plans, sick days, health insurance benefits, stock options and other perquisites that are often available to full-time employees (like government workers, private sector employees, Members of Parliament etcetera).

Since most Canadians are aware of Mr. Trudeau's connections to Canada's upper classes, let's take a closer look at the less well known Bill Morneau and see how well he understands middle class Canada.   Mr. Morneau is the son of W.F. Morneau who founded W.F. Morneau which became Morneau Sobeco Income Fund in 2005 and Morneau Shepell in 2011.  The company is a "human resources consulting and technology company that takes an integrated approach to employee assistance, health, benefits and retirement needs."  The company claims that it isa eh largest provider of retirement and benefits plans and the largest provider of integrated absence management solutions in Canada with 20,000 clients under its wings and more than 4000 employees in offices across North America.  It is a publicly traded company (symbol - TSX: MSI).  Frank Morneau is still Honorary Chair of the company as shown here:

Mr. Frank Morneau certainly looks very well connected and not exactly middle class, doesn't he?

Now, let's look back in time at Morneau Shepells Management Information Circular dated March 3, 2015, seven months before Bill Morneau was appointed Minister of Finance.  Here's what we find under the list of the company's Board of Directors:

You will notice that as Executive Chair of the Board, Bill Morneau controlled 2,247,812 shares.  At the current market price of $20.45, the shares under his control are worth $45.97 million.  Additionally, not too many middle class Canadians can afford to attend the London School of Economics, can they?  

Now, let's look at his compensation:

Here is his compensation going back to 2010 so you can see that his million dollar plus paydays are not one-offs:

Note that his total compensation of $1,071,859 in his last year of working prior to becoming Finance Minister was down from the previous year when it totalled $1,779,562.  It would take a median Canadian family 13.2 years to earn what Mr. Morneau earned in 2015.  It really doesn't get much less middle class than that, does it?  You will also note that Mr. Morneau also uses the tax advantages afforded by share-based awards.  In case you were not aware, taxes on capital gains from stock price appreciation are significantly more advantageous than taxes paid on salaries.  Apparently, Mr. Morneau feels that there is nothing wrong with lining up at the tax trough when it comes to his own compensation!  This is a tax strategy that corporations use to enhance the compensation packages for their executives and upper level managers; those who spend their middle class days, sweating for a living, can only dream of such compensation.

From this posting, you can clearly see that Mr. Morneau clearly does not practice what he preaches.  While he publicly states that he is concerned about the welfare of Canada's middle class, this background information  would suggest that he has spent his entire life living among the fraction of one percent of Canadians who can call themselves multi-millionaires.  Additionally, let us not forget that his wife, one Nancy McCain, is one of the heirs to the privately-held multi-billion dollar Mccain Foods empire which was co-founded by her father, Andrew McCain.   The family recently donated $1 million to Acadia University in Wolfville, Nova Scotia, a sum that is unimaginable to middle class Canadians.

Basically, with these moves, the Canadian government is sending a very strong message to all Canadian taxpayers; your money is only yours until we decide that we need it because we can't control our overspending habits.  These proposed tax changes are nothing more than state-sanctioned theft and are just the first step on a slippery slope of government confiscation of your hard-earned dollars.  Governments around the world will, at some point, realize that their debts are accumulating at unsustainable levels, a factor in the Trudeau government's 2017 - 2018 budget deficit of $28.5 billion and one of the main reasons why they, like other governments, will have no choice but to take more from taxpayers.  Apparently, it's always easier for governments to raise taxes than it is to rein in spending.

In closing, let's go back to both Justin Trudeau and Bill Morneau.  As the prophetic George Orwell put it so eloquently in his book "Animal Farm", "All animals are equal, but some animals are more equal than others."  At least now we know two Canadians that are more equal.